Barclays confirmed today (8 May) it is stripping out parts of the business to form “Barclays Non-Core” as it updated its turnaround plans and announced that 14,000 jobs will be axed at the investment bank this year in the wake of declining profitability.
The announcement came after earlier this week Barclays revealed investment banking unit after it reported a 28 per cent income fall and halving of profits for the unit in the first three months of this year.
Income fell to a little less than £2.5bn, pushing profits down 49 per cent to £668m compared with £1.32bn for the same period last year. Overall adjusted profit before tax fell 5 per cent to £1.69bn.
The hit taken by the group’s profits because of problems with the investment banking arm come just weeks after shareholders including Standard Life slammed the bank’s proposed bonus hike in the wake of a similar slide through 2013.
Barclays’ bad bank will consist of about £90bn of investment bank risk weighted assets, including non-standard fixed income, currencies and commodities derivatives, non-core commodities and specific emerging markets products.
As a result of this the investment bank is expected to represent no more than 30 per cent of the group total by 2016, compared to just over 50 per cent now.
Headcount at the investment bank is set to fall by around 7,000 by 2016 and the overall 2014 group gross headcount reduction has been increased to 14,000.
Mr Jenkins said: “This is a bold simplification of Barclays. We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.
“In the future, Barclays will be leaner, stronger, much better balanced and well positioned to deliver lower volatility, higher returns, and growth.
“My goal is unchanged: to create a Barclays that does business in the right way, with the right values, and delivers the returns that our shareholders deserve. However, the way in which we will achieve this is different.
“Today we are setting out how we will reach that goal and create the ‘Go-To’ bank for our customers and clients, our colleagues and our shareholders.”
A further £800m has been set aside to pay for the transformation of the bank, in addition to the original £2.7bn announced in February 2013.
